Enterprise resource planning (ERP) systems are management information systems that integrate, automate, track, and regulate many business practices of a company. ERP systems can address many facets of a company's operation, such as accounting, sales, invoicing, manufacturing, logistics, distribution, inventory management, production, shipping, quality control, information technology, and human resources management. ERP systems can include computer security to protect against outside crime such as industrial espionage, and to protect against inside crime such as embezzlement. ERP systems can be set up to detect, prevent, and report a variety of different occurrences of fraud, error, or abuse. ERP systems can be oriented to the company's interactions with customers (“front end” activities), quality control and other internal workings of the company (“back end” activities), interactions with suppliers and transportation providers (“supply chain”), or other aspects of business.
It is becoming increasingly beneficial for companies to supplement ERP systems with compliance control applications in view of recent laws such as “The Sarbanes-Oxley Act of 2002” (Pub. L. No. 107-204, 116 Stat. 745, Jul. 30, 2002), also known as “Sarbanes-Oxley” or the “Public Company Accounting Reform and Investor Protection Act of 2002” or “SOX.” Sarbanes-Oxley seeks to protect investors by improving the accuracy and reliability of corporate disclosures. The act covers issues such as establishing a public company accounting oversight board, auditor independence, corporate responsibility, and enhanced financial disclosure.
Among other things, Sarbanes-Okley requires CEOs and CFOs to certify financial reports. Moreover, Sarbanes-Oxley mandates a set of internal procedures designed to ensure accurate financial disclosure.
Although modern ERP systems help companies become better organized and some even address the challenges of regulatory requirements such as Sarbanes-Oxley, operating, administering, or modifying an ERP system can be exceedingly complex. Indeed, because of their wide scope of application within a company, ERP software systems rely on some of the largest bodies of software ever written.